Govt powers ‘stretched to limit’ over Middlemarch site, say LibVan

The Middlemarch building plot at the corner of Lord Street and Walpole Avenue in Douglas

An island political organisation has highlighted damaging allegations made against the government in a report on the multimillion-pound Sefton Group bailout.

According to a statement from the Liberal Vannin party, the report of the Economic Policy Review Committee on the government’s handling of the bailout highlights gross misconduct by those in high office in relation to the approval of the purchase and lease back scheme for the Middlemarch site by Douglas bus station.

Party chairman Roy Redmayne said according to the report: ‘Those responsible for approving (the scheme) were acting outside the strict confines of the Land and Property Acquisition Fund.’

He said the fund was set up to buy strategic assets for the nation but according to the policy review committee ‘the government was stretching its authority in the use of the fund well beyond the fund’s fundamental purpose’ in its dealings with the Sefton Group. The committee’s report continues: ‘However, as we have shown, the government acted in a manner which stretched its powers to the limit, and then, we think, beyond.’

The statement from the party also notes that the critical report has been overshadowed by the news of another radical restructuring of government departments which was announced recently.

During the earlier part of this year the government announced a £4.5m bailout package for the Sefton Group.

The multimillion-pound deal included a £1.3m loan as well as an additional £3.2m to buy back the Middlemarch Douglas development site.

The Sefton Group PLC is a Manx company which owns the Sefton and the Palace Hotel Casino on Douglas promenade, along with the Sefton Express hotel near Ronaldsway airport.

At the time, managing director of Sleepwell Hotels Mark Wilson criticised the government’s action, saying it created a biased and dysfunctional commercial environment, with unfair competition. He added: ‘This makes it extremely difficult, if not impossible, for Sleepwell Hotels to trade profitably in the future.

‘The Sefton Group is now free, with its government support, to undertake a policy of anti-competitive discounting and uncapped re-investment secure in the knowledge the government will have to support its underwriting.’

Chief Minister Allan Bell defended the government’s intervention back in April insisting it was justified given the scale of the Sefton Group’s role in the local economy.

‘There will be questions about the deal, naturally, but I believe it is the right and responsible thing to do in the circumstances,’ he said

But Mr Redmayne said the chief executive of the Sefton Group made it very clear the company was not in the dire straits that had been painted in the Tynwald debate.

He said the committee had contradicted the chief executive’s strong stance in defending the company’s position but cited confidentiality as a reason to provide no evidence to support their finding.

‘The vigorous defence of statements made to the contrary by the Chief Minister clearly had a profound effect on Tynwald members when approving the actions of the Council of Ministers,’ the party statement says.

The Tynwald debate focused on how the Sefton Group was financially structured and whether it could continue functioning with or without support.

‘We are at loss to know how public money could be approved, given that Tynwald members and the tax payers still do not have a clear picture of the true financial situation of the Group at that time,’ Mr Redmayne said.

‘The Party also believes that the Committee has not dispelled the perception that the support was given via The Old Boys’ Network and calls for an independent ombudsman with lay members to officiate.

‘Finally, given the cavalier approach to the law by ministers, we oppose the idea suggested by Mr Ronan of giving more power to central government and having a top down rather than a bottom up approach, which we think is naive, fundamentally-flawed and has to be vigorously resisted.’

Sefton Group debts fell from a high of £96 million in early 2010 to £24 million this year. The £1.3 million loan is repayable over a five-year period.

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